A burst of buying Friday in U.S. stocks defied slumps in other markets and offered hope for investors shaken by geopolitical turmoil. Major U.S. stock indexes closed up around 1 percent, buoyed by signs that tensions in Ukraine might be easing.

The rally on Wall Street contrasted with price declines in European and Asian stock markets. Fear has been creeping into stock and bond markets around the world in recent weeks against a backdrop of escalating global conflicts.

News Friday of U.S. fighter jets dropping bombs in Iraq and the end of a three-day cease-fire in Gaza weighed further on European and Asian markets.

U.S. stock markets bucked the trend Friday as investors snapped up shares that had been beaten down in recent days. The buying surged late in the day on reports that Russia had ended military exercises near Ukraine. The Dow Jones industrial average rose 1.1 percent, its biggest gain since March. The index remains 3.4 percent below its record high set July 16.

"The U.S. economy will grow at 3 percent or 4 percent for the rest of the year," Paulsen said. "Are geopolitical risks really going to have an economic impact?"

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It's a question that's been unsettling investors.

In June and most of July, prices in major stock indexes in the United States rose even in the face of the widening conflicts around the world.

But then the West imposed increasingly crushing sanctions on Russia for supporting rebels in Ukraine. Israel's bloody war in Gaza dragged on. And Sunni extremists made advances in northern Iraq.

Prices then began a sustained decline, even in resilient U.S. markets.

The fear has driven up various government bond prices, too, and sent yields down. The yield on German government notes maturing in 10 years, for instance, hit an all-time low Friday. The yield on U.S. notes of the same maturity has reached its lowest level in about a year.

Another sign of worry, the VIX, a gauge of expectation of future U.S. stock volatility, has climbed nearly 50 percent since early July.

Benchmark U.S. crude oil rose 31 cents to close at $97.65 a barrel on the New York Mercantile Exchange. Brent crude fell 42 cents to close at $105.02 on the ICE Futures exchange in London.

The Citi report also noted, though, that there was reason to keep buying stocks, not the least of which is strong corporate earnings.

An announcement from Gap on Friday underscored that trend. It reported that sales increased 3 percent in the second quarter as growth at Old Navy offset lower sales of the company's namesake brand. Its stock jumped $2.37, or 6 percent, to $42.57.

With nearly all second-quarter results for S&P 500 companies out, analysts are calling for earnings in that index to jump 10 percent from a year earlier.

In economic news, the U.S. Labor Department reported that workers were more productive in the April-June quarter and that labor costs rose slightly, a sharp turnaround from grim first-quarter figures. Productivity increased 2.5 percent at a seasonally adjusted annual rate, after plummeting 4.5 percent in the first quarter.